Korean Fair Trade Commission Ban Limit Conglomerate Expansion, Nevertheless Many Top Business Groups are Granted Exemptions
The Korean fiscal crisis of 1997 led to a massive restructuring of Korean big business. For example, Korea’s Fair Trade Commission limits conglomerate expansion into areas that can weaken core businesses and create unfair competition in the market.
In fact, regulations by the Fair Trade Commission ban 11 out of the 22 business groups with assets exceeding $6 billion from investing more than 25 percent of their net assets in other companies. This restriction also includes each group’s affiliates.
According to the Korea Times, Korea’s 11 business groups affected by the restriction are Hyundai Motor, LG, SK, KT, GS, Hanhwa, Kumho Asiana, Doosan, Korea Railroad, Dongbu and Hyundai.
In addition, GS, a 2004 spin-off of the LG Group, and the privatized Korea Railroad are listed.
Interestingly despite the FTC ban, the need to encourage economic growth means many of the groups are granted exemptions.
For example, nine conglomerates, including Samsung, were removed from the list for 2005.
Samsung was temporarily freed from the regulation for one year as it lowered its asset-to-debt ratio to below 100 percent.
The other eight companies are Hyundai Heavy Industries, Hanjin, Shinsegae, LS, Daewoo E&C, Korea National Housing Corp., Korea Land Corp. and Korea Gas Corp.
Those companies were removed from the list as they met one of four new regulations that the FTC had launched from April 1, 2005.
Another exemption releases Korean conglomerates based of their assets. This applies to Samsung, the nation’s biggest business concern, followed by Korea Electric Power Corp. (KEPCO), and Hyundai Motor. LG and SK were also granted exceptions.
In fact, regulations by the Fair Trade Commission ban 11 out of the 22 business groups with assets exceeding $6 billion from investing more than 25 percent of their net assets in other companies. This restriction also includes each group’s affiliates.
According to the Korea Times, Korea’s 11 business groups affected by the restriction are Hyundai Motor, LG, SK, KT, GS, Hanhwa, Kumho Asiana, Doosan, Korea Railroad, Dongbu and Hyundai.
In addition, GS, a 2004 spin-off of the LG Group, and the privatized Korea Railroad are listed.
Interestingly despite the FTC ban, the need to encourage economic growth means many of the groups are granted exemptions.
For example, nine conglomerates, including Samsung, were removed from the list for 2005.
Samsung was temporarily freed from the regulation for one year as it lowered its asset-to-debt ratio to below 100 percent.
The other eight companies are Hyundai Heavy Industries, Hanjin, Shinsegae, LS, Daewoo E&C, Korea National Housing Corp., Korea Land Corp. and Korea Gas Corp.
Those companies were removed from the list as they met one of four new regulations that the FTC had launched from April 1, 2005.
Another exemption releases Korean conglomerates based of their assets. This applies to Samsung, the nation’s biggest business concern, followed by Korea Electric Power Corp. (KEPCO), and Hyundai Motor. LG and SK were also granted exceptions.
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